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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Jack Clarke who wrote (8000)	11/15/1997 10:54:00 AM
From: studdog	Respond to of 18056

Clear sentiment change:SI Hot Stocks list last week was 20 - 30% threads on bear markets, shorting etc. Today, only this thread is still on there. Karl

To: Jack Clarke who wrote (8000)	11/15/1997 11:18:00 AM
From: Zeev Hed	Read Replies (3) \| Respond to of 18056

Jack, do the Fed's "manipulate" the markets? at extreme points, you bet your libido they are. That is one of the reasons that one of my turn signals is excessive ticks (both plus and minus), they jump in just as if they were "specialists" and stand against the market. When they do that in the futures pit, it has even a greater bang. Zeev

To: Jack Clarke who wrote (8000)	11/15/1997 1:24:00 PM
From: tekgk	Respond to of 18056

>> My only question is, are they? Since secrets can't be kept forever - we'll find out eventually.

To: Jack Clarke who wrote (8000)	11/15/1997 2:24:00 PM
From: Rational	Read Replies (2) \| Respond to of 18056

Jack: .. one of the FR's responsibilities is "maintaining the stability of the financial system and containing systemic risk that may arise in financial markets." This is a goal of the Fed. But, Fed is mandated to do anything only through monetary policy (money supply and interest rates) based on a vote by 11 governors. You may be surprised that Fed has very little power, contrary to the prevalent belief, in manipulating the monetary policy or to make irrational moves, unless they conspire to cheat US taxpayers. The governors are quite talented and are backed by a pool of very talented economists hired mainly from top 5 US universities. Fed is basically on its toes to catch up with the financial markets. That is the demand and supply for money in the market sets the long and short rates and Fed alters policies to reflect these moves in the Street, lest they will lead the investment bankers make huge arbitrage profits at costs to taxpayers. The only important piece of information that Fed gets ahead of the rest is the aggregate demand for loans (aggregate across banks). Thus, the Wall Street and the Fed play the game of watching at each others moves all the time. Only when the Fed gets out of sync with the Wall Street, fears mount. I have attended several Board of Gov meetings. You may be surprised to note that some prominent economists have told on the face of the BOG that locking up the Fed will be optimal for the economy. Thus, under the facade of a towering AG, you may be surprised to note how little power a rational policy making body has. They have to act according to the best available economic wisdom/model, lest there are august bodies of economists who will call for a dismissal of the Fed and Fed has to keep defending its irrational policies; the Fed knows this and so they find it critical to adopt completely defensible monetary policies. A lot of on-going scientific research precedes continuation of existing policies or changes in those policies. Sankar